Arab power grid gains momentum
Project could cost $1.5b and help save the region $10b
Oct 24, 2012 - By Saifur RahmanBusiness Editor
Dubai: A power grid to interconnect the power production, transmission and distribution in the Arab World – could become a reality if the governments take it seriously.
The project is expected to cost about $1.5 billion and aims to exchange 3,000 megawatt through direct electrical lines. The plan also include linking the Arab world and parts of Europe through a common power grid could become reality soon
The Arab Power Grid include the construction of a 1,370 km link between Egypt and Saudi Arabia. The link will include a 25 km subsea cable, which will cross the Gulf of Aqaba. It will provide each country with spare power capacity during peak periods of demand.
Estimates suggest the benefits could be worth as much as $10 billion over 20 years. Once the connection is complete, Gulf states could trade surplus electricity with customers in Europe.
“We will soon submit a proposal to set up an Arab Power Grid that will help electricity flow across the region and ensure efficient use of power,” Ahmad Bin Hilli, Deputy Secretary General of the Arab League, told delegates at the World Energy Forum.
He said, Arab countries are working on this for some time. The proposal will be submitted at the next Arab League meeting.
He said, the Arab World needs to embrace green technology faster than others.
However, some Arab countries have already established interconnection links between their respective electricity power grids. In 1952, a tie line was erected between Algeria and Tunisia to alleviate cross border short term power shortages, and in 1979, a tie line was established to link Morocco and Algeria for similar reasons.
Despite suffering problems which limited the success of these project, the experience and insight gained contributed to the spawning of other projects on a much greater scale that now encompass the whole region.
The total investment in the various Arab Interconnection Projects has reached $2 billion over the last 20 years, including $556 million for the Eight Country Interconnection Project, $1.1 billion for the GCC Power Grid Interconnection Project, $169 million for the Maghreb Countries Interconnection Project and $86 million for the interconnection of the two electricity grids in Yemen.
The Arab Fund contributed $678 million to the financing of most of these projects through loans on concessionary terms. These loans covered 34 per cent of the total costs of these projects, with the balance coming directly from the participating countries.
The total capital savings accruing over a 15 year period is estimated to be approximately $ 3.7 billion, attributable to the postponement and/or cancellation of the investment in new generating capacity of around 6.5 GW. This figure does not include an additional estimated annual expenditure saving of $120 million in operation and maintenance costs.